Staying Atop the Market

The stock market is always one step ahead of you. The sooner you accept this fact, the better for your trading results. It helps to think of the market like the rabbit on the rail at the greyhound racetrack. As an investor, you should never mistake yourself for the rabbit or else the market will have to humble you and remind you that you are just a dog. The best you can expect to be is a greyhound in close pursuit, tethered to this market rabbit by an invisible rope. The fact is that the market rabbit is not really in the race. You are racing your fellow greyhounds. They are the ones whom you want to stay out in front of.

The questions you should ask are twofold. The first question is how to stay tethered to this rabbit. The second question is how closely tethered you actually want to be. Candidly answering the first may result in your answering the second by default. So focus on the first question and then ask yourself this: what you are willing to do each day to maintain your connection to the market? Your personal daily circumstances as well as your emotional commitment and discipline should guide you to generate a reasonable answer. With those inputs, you can then decide whether you allocate 30 minutes a day or 30 minutes a week.

The point here is that your allocation should be unique to you personally. To be successful, it must be based on brutally honest inputs by you about yourself. For this to work best, you must be willing to put it in writing, making it easier for you to revisit on a regular basis. You should also note that it’s not unusual to be overly optimistic at first about your abilities to pay attention and stay on top of the market.

As real time investing plays out, it might become a bit more comfortable to adjust your routines – let out some rope, so to speak – and not try to stay so close. By default, you therefore answer the second question. How closely tethered to the market rabbit do you really want to be?

It becomes crystal clear that the more closely you remain tethered, the more significant the commitment in both time and emotional capital required to do so. A day trader better be prepared to be tethered to the market rabbit on a very short rope. The position trader less so. A long-term investor comfortably less so.

The bottom-line is that there is no one magical tether. The challenge is to construct individual routines that match the personal fire in your belly so that you remain in equilibrium and are able to maintain consistent focus and discipline over the long period of time that you will be tethered to the market rabbit by this invisible rope of your own design.

Trade well; trade with discipline!
-- Gatis Roze

About the authors:Gatis Roze, CMT, holds an MBA from the Stanford Graduate School of Business and is a past president of the Technical Securities Analysts Association (TSAA). A full-time investor for over 25 years, he has taught sold-out investment courses throughout the Pacific Northwest and beyond since 2000. Gatis is a co-author of the recently-released Tensile Trading: The 10 Essential Stages of Stock Market Mastery, published by Wiley.Grayson Roze has worked in the financial services industry for StockCharts.com since 2012, now serving as a Business Manager at the company. He is also a co-author of Tensile Trading: The 10 Essential Stages of Stock Market Mastery. Grayson holds a Bachelor's degree from Swarthmore College, where he studied Economics and Psychology.

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